Republic Services, Inc. RSG

The business

Republic Services is the second-largest solid-waste company in the United States, and the model is deceptively simple: it collects residential, commercial, and industrial waste, hauls it through transfer stations, and buries what is left in permitted landfills it owns. Collection carries the franchise at $11.2B of FY2025 revenue, about 68% of the total, and within it the small-container commercial line is the single biggest and highest-return slice at roughly $5.1B; residential ($3.0B) and large-container industrial ($3.1B) fill out the rest. The disposal layer, landfills plus transfer stations, is the smaller reported line but the true moat, because a competitor who hauls waste still has to pay Republic to bury it. Environmental Solutions, the hazardous and specialty-waste arm scaled up by the US Ecology deal, is the higher-margin growth arm at about $1.8B, and recycled-commodity sales (≈$0.4B) are the volatile tail. Solid waste, roughly 89% of revenue, is where almost all the operating profit sits; Environmental Solutions grows faster off a smaller base.

The one thing the financials understate is pricing power. Republic sets core price above its own internal cost inflation year after year, and the mix of contract types is the mechanism: open-market commercial and industrial work reprices freely (core price of 8.4% on open-market related revenue in the latest quarter), while CPI-linked residential and municipal contracts reprice more slowly (4.4% restricted), and management manages the blend to stay ahead of costs. Landfills are the structural reason this holds. You essentially cannot permit a new one, so disposal capacity is a scarce, decades-long asset and price is not competed away. What changed recently is that volume has gone slightly negative (organic volume trimmed related revenue about 1% in the latest quarter, GDP and housing sensitive) even as price more than offset it, and margins kept expanding, which is exactly the profile of a business that trades cyclicality for pricing.